LGIM launches multi-asset income range

LGIM launches multi-asset income range

Legal & General Investment Management has unveiled a range of risk-targeted multi-asset income funds.

The range will consist of three funds: the L&G Multi-Index Income 4, 5 and 6 portfolios, ranked in ascending order of risk.

The funds are expected to generate yields of 3.8 per cent, 4.1 per cent and 4.2 per cent respectively, though they will not have specific targets.

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The trio will invest in L&G’s index tracking funds, L&G’s active funds and some external income-focused ETFs, the firm said.

They will be managed by the same team that runs the existing L&G Multi-Index range, headed by Justin Onuekwusi and Andrzej Pioch.

The lowest risk fund, the Income 4 fund, will aim to produce a large proportion of its income from fixed income assets, while 5 and 6 will generate more through equities.

Ongoing charges will be 0.36 per cent, 0.38 per cent, and 0.39 per cent respectively.

The group will use data from Distribution Technology to confirm the funds maintain the targeted risk profile.

Mr Onuekwusi said: “In this low-interest rate world, the industry has seen increasing demand for multi-asset income funds targeting high-yield levels. However, there are clear dangers that come with chasing income. It may not be sustainable or may force a change in a fund’s risk profile in order to meet yield targets.

“Advisers are looking for greater certainty of risk over time on behalf of their clients, as the success of our multi-index range has proved. Rather than maximising income, we believe the focus should be on maximising total return for a given level of risk.

“Therefore, our multi-index income funds do not target a specific yield, but bias sources of total return towards income producing assets while maintaining the suitability of risk profiles.”

Several asset managers have launched multi-asset income funds in recent months, though a recent study from Aviva Investors suggested investors believe income yields above 4 per cent are not sustainable unless capital is put at risk.